In recent months and years, prediction markets have begun to become more and more mainstream. However, there still exists a certain element of mystery and misinformation out there about these markets, which is why we have put together this handy article.
Our aim is that once you have finished reading, you know exactly what a prediction market is and how it differs from the classic style of sports and event betting that you’re familiar with, and the traditional stock market.
What is a Prediction Market?
A prediction market is an exchange-traded platform where the participants buy and sell shares, based on the predicted outcome of future events. The most popular events that users tend to gravitate toward are sporting ones, but there are a range of other avenues available to explore.
Using all of the information of various users and various AI algorithms, these platforms can give you up to date and accurate odds on everything from who will win Survivor Season 50 (Aubry Bracco apparently), to whether 2026 will finally be the year that the U.S. government confirms that aliens are real (not likely).
Using AI algorithms and all of the information input from various users, including their trades, combined with the latest news stories and developments, the prediction market then gives you a probability of likely outcomes – Kalshi is saying there’s a 78% chance that aliens DON’T exist and an 88% chance that Aubry Bracco wins Survivor by the way.
To fully explain the difference between prediction markets, sportsbooks and the stock market, let’s take a quick glance at the other two function.
(The prediction markets favourite for Survivor Season 50.)
How do Bookmakers Work?
When a sportsbook or a bookmaker is coming up with odds for an upcoming game, they of course fully analyse the game. Using a team of dedicated analysts they look at long-term trends, historical data and also analyse how the contrasting tactical approaches of each side interact with one another.
They then work out the probabilities of each outcome, before building in something known as a ‘vig’, which is essentially a house edge that ensures future profitability. This is typically somewhere between 2 and 7%.
After this, the odds change based on two factors – current events and betting behavior. The latter is the most consistent and significant though. If Lionel Messi were to drop out of a squad due to injury, Inter Miami’s odds of winning would go up.
If however, 10,000 people suddenly bet on Miami’s opponents, even if they were rank outsiders, their odds would suddenly drop. That’s because bookmakers are scared of liability and thus reduce or fluctuate odds based on volume.
The goal of a sportsbook is always, at the end of the day, to make money.
How do Stock Markets Work?
Trust and informed gambles. When you buy stocks and shares, you are buying into the future profitability of a company. When they go well, you may be paid out dividends and then ultimately be able to sell your shares for a profit.
If things go badly, as they unfortunately are for many right now due to the war in Iran, dividends disappear and prices fall dramatically. Performing well on the stock market comes down to a number of factors, but the main two are consistency and coverage.
Anyone can make a bundle from investing in the right company at the right time, but only a few can reap the long-term rewards of consistency and coverage by maintaining a cool head.
(The lowdown on the stock market.)
How Prediction Markets Differ From Both
They are effectively a hybrid system of the both. In a prediction market the odds (probability/contract) is set by market activity, which you can buy into. The provider doesn’t make any money betting against you, instead they charge a percentage fee, typically 2% on your winnings, like a trading platform would.
To illustrate, imagine a generic sports matchup with the following prediction market probabilities:
Team A to win: 75%
Team B to win: 25%
In this scenario, 75% of the market expects Team A to win, based on factors like form, league position, and recent performance. A participant who believes Team B is more likely to win could purchase contracts on the “No” outcome. If Team B then wins, each successful contract pays out according to the market rules, minus a small platform fee (typically around 2%), similar to a trading commission.
This example demonstrates how prediction markets combine elements of betting and stock trading: prices move according to collective market sentiment rather than a house edge, and careful analysis can help participants find value even against the majority expectation.
The rising popularity of prediction markets has also created demand for guidance on getting started, including access to promotional offers. Platforms like Casino.org now provide a Kalshi bonus code to help new users begin trading on these markets. Sites like this are important because they aggregate information across platforms, highlight trustworthy operators, and make it easier for participants to find valuable incentives without having to hunt through multiple sources. For readers interested in trying prediction markets, these curated bonus codes can improve the initial experience and reduce friction when entering a new trading environment.
